NFATCA Report: V20N9

By Jeff Folloder

Registering with the State Department and paying the annual registration fees as a manufacturer under the International Traffic in Arms Regulations (ITAR) has always been a subject of great contention in the NFA community. Unfortunately, it has often been difficult to obtain confirmation of exactly who has to pay, under what circumstances, and who, if anyone, is exempt from registration and payment. “Internet experts” have offered opinions as to just what to do and following some of that advice has resulted in rather unpleasant outcomes. The NFATCA has always advised its members and the NFA community to seek the advice of counsel if there is any doubt as to whether one must register and pay. Fortunately, the State Department has finally made it perfectly clear exactly who must register and pay and who cannot. State published an advisory on July 22, 2016 that can be found here: www.nfatca.org/pubs/ITAR_State_Rules.pdf The important highlights of the letter:

“ITAR registration is required of persons who engage in the business of manufacturing defense articles. Persons who do not actually manufacture ITAR-controlled firearms (including by engaging in the activities described below, which DDTC has found in specific cases to constitute manufacturing) need not register with DDTC – even if they have an FFL from ATF. As indicated above, the requirements for obtaining FFLs under the GCA are separate and distinct from the requirement under the AECA and ITAR to register with DDTC.

1. Registration not Required – Not Manufacturing: In response to questions from persons engaged in the business of gunsmithing, DDTC has found in specific cases that ITAR registration is not required because the following activities do not meet the ordinary, contemporary, common meaning of “manufacturing” that DDTC employs in implementing the ITAR and, therefore, do not constitute “manufacturing” for ITAR purposes:

a) Occasional assembly of firearm parts and kits that do not require cutting, drilling, or machining;

b) Firearm repairs involving one-for-one drop-in replacement parts that do not require any cutting, drilling, or machining for installation;

c) Repairs involving replacement parts that do not improve the accuracy, caliber, or other aspects of firearm operation;

e) Attachment of accessories to a completed firearm without drilling, cutting, or machining—such as attaching a scope, sling, or light to existing mounts or hooks, or attaching a flash suppressor, sound suppressor, muzzle brake, or similar item to a pre-threaded muzzle;

f) Cosmetic additions and alterations (including engraving) that do not improve the accuracy, caliber, or other aspects of firearm operation beyond its original capabilities;

g) Machining new dovetails or drilling and tapping new holes for the installation of sights which do not improve the accuracy or operation of the firearm beyond its original capabilities; and

h) Manual loading or reloading of ammunition of .50 caliber or smaller.

Activities limited to the domestic sale or resale of firearms, the occasional assembly of firearms without drilling, cutting, or machining, and/or specific gunsmithing activities that do not improve the accuracy, caliber, or operations of the firearm beyond its original capabilities (as described above) are not manufacturing within the context of the ITAR. If you are not manufacturing, exporting, temporarily importing or brokering defense articles or services, you are not required to register with DDTC.

2. Registration Required – Manufacturing: In response to questions from persons engaged in the business of gunsmithing, DDTC has found in specific cases that ITAR registration is required because the following activities meet the ordinary, contemporary, common meaning of “manufacturing” and, therefore, constitute “manufacturing” for ITAR purposes:

a) Use of any special tooling or equipment upgrading in order to improve the capability of assembled or repaired firearms;

b) Modifications to a firearm that change round capacity;

c) The production of firearm parts (including, but not limited to, barrels, stocks, cylinders, breech mechanisms, triggers, silencers, or suppressors);

d) The systemized production of ammunition, including the automated loading or reloading of ammunition;

e) The machining or cutting of firearms, e.g., threading of muzzles or muzzle brake installation requiring machining, that results in an enhanced capability;

f) Rechambering firearms through machining, cutting, or drilling;

g) Chambering, cutting, or threading barrel blanks; and

h) Blueprinting firearms by machining the barrel.

This article first appeared in Small Arms Review V20N9 (November 2016)and was posted online on September 23, 2016